EnCap closes $3.5B Permian minerals continuation vehicle, largest in upstream energy
What's the deal? EnCap InvestmentsDealroom has a profile for this one. Try Dealroom → has closed the EnCap Minerals Continuation Vehicle with roughly $3.5 billion in capital commitments. The private equity vehicle is anchored by funds affiliated with Melange Capital PartnersDealroom has a profile for this one. Try Dealroom → and carries forward a Permian Basin minerals portfolio. EnCap says it is the largest capital raise to date for a continuation vehicle in the upstream energy sector.
What's inside? The portfolio holds about 134,000 net royalty acres in the core of the Permian Basin, producing roughly 37,000 barrels of oil equivalent per day with no future capital expenditure required. Operators including ExxonMobil, DiamondbackDealroom has a profile for this one. Try Dealroom →, OccidentalDealroom has a profile for this one. Try Dealroom →, and ConocoPhillips account for about 48% of activity across the acreage.
Who backed it? Investor demand exceeded the target, drawing both existing and new institutional investors, EnCap said. The assets were built through partnerships with Fortis MineralsDealroom has a profile for this one. Try Dealroom →, OGX Resources, Piedra Energy III, and Pegasus Resources, which still manages them.
What's the endgame? The deal lets EnCap and its partners keep owning the assets while giving existing investors a liquidity option. "We have long held strong conviction in the Permian Basin, and we believe it will remain a critical economic engine for many years to come," managing partner Doug Swanson said.
By the numbers: Since 1988, EnCap has raised 25 institutional funds totalling over $47 billion and manages capital for more than 350 investors. Evercore advised on the deal, with Kirkland & EllisDealroom has a profile for this one. Try Dealroom → as EnCap's counsel and Latham & WatkinsDealroom has a profile for this one. Try Dealroom → representing Melange.
The signal: Continuation vehicles have become an established liquidity tool, letting managers retain prized assets while returning cash to investors. At $3.5 billion, EnCap's deal dwarfs recent energy continuation transactions, including Lime RockDealroom has a profile for this one. Try Dealroom →'s $340 million Bakken vehicle in August and Energy Capital PartnersDealroom has a profile for this one. Try Dealroom →' $834 million Next Wave vehicle in October — a sign of how far the structure has scaled.
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Image credit: Paul Lowry
